Former Siemens Patent Attorney Indicted In $2.4 Million Fraudulent Billing Scheme

Michael E. McCabe, Jr.Client Funds, Patent Criminal0 Comments

The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and ???????????????????????????????????????captures the essence of the evolutionary spirit.” — Gorden Gekko, Wall Street.

Maybe “greed works” for some.  For Alexander James Burke, however, greed may end up being his downfall. On October 16, 2014, Burke, a patent attorney once employed by Siemens AG’s Pennsylvania-based health care information technology unit, was indicted by a federal grand jury in the Eastern District of Pennsylvania on twenty-three felony counts of wire fraud, conspiracy to commit wire fraud, money laundering, and conspiracy to commit money laundering. United States of America v. Alexander James Burke, Crim. No. 14, U.S. Dist. Ct., E.D. Pa. (Oct. 16, 2014).

The grand jury indictment alleges that between 2008 and 2013, Burke and an unidentified accomplice engaged in a scheme to defraud and obtain money by false pretenses.  According to the indictment, Burke was hired in 2000 by “Company A,” where he was responsible for preparing and prosecuting patent applications. It is not clear from the indictment whether “Company A” is Siemens AG or its health care technology unit.  The indictment, however, alleges Burke’s office moved in September 2009 from New Jersey to Malvern, Pennsylvania.  According to its website, Siemens’  health care unit is located in Malvern, Pennsylvania.

According to the indictment, Burke was permitted to hire outside counsel to prepare and prosecute patent applications, respond to USPTO rejections, and prepare appeals of final denials of patent applications. Prior to September, 2008, Burke engaged outside counsel, identified as “Attorney DC, a patent attorney,” to prepare and prosecute patent applications for inventors of “Company A” (which, presumably, is Siemens or its health care unit).

siemensThe indictment further alleges that in or about September of 2008, Burke and the unnamed co-conspirator patent attorney agreed that Burke would send patent work from Burke’s employer to the outside attorney, the outside attorney would do no work on the projects, and the outside attorney would bill Burke’s employer for the assigned project. Burke apparently had the authority to approve payment of the bills, and when “Attorney DC” was paid, the attorney would send most of the funds back to Burke for his personal use. Burke himself would complete the work for which the outside attorney had purportedly been hired. “On nearly all of the projects invoiced on or after September 1, 2008, Attorney DC did not do substantive work on the project but returned it as he received it.”

The indictment also alleges that after approving the bills electronically, Burke would send an electronic message to the entity which processed the approved bills for payment.  Burke’s employer relied on Burke’s approval of the bills submitted by the unnamed attorney and paid that attorney the amounts billed by wire transfer to a bank in Virginia. The attorney would keep “a small portion” of the payments for himself and send the balance of the proceeds to Burke by check through the mail.  Burke would then deposit the funds in a bank account maintained in New Jersey in the name of “Electrical Services & Networks.”  Over the course of the scheme, Burke regularly wired funds from his New Jersey bank account to an offshore account in the Isle of Man; the offshore account was maintained in the name of “Intellectual Property Management Limited.”

In approximately January 2013, Burke obtained access to the billing system of Attorney DC and from that point forward generated the bills directly in the name of Attorney DC to his employer.  Under this new arrangment, Burke paid his accomplice $5,000 per month for his part in the scheme.

Between approximately September 1, 2008 and May 12, 2013, the indictment alleges, Burke approved billings for work claimed to have been done by ED PaAttorney DC, but for which no work was done, in the amount of approximately $2,481,020.  The payments resulted from approximately 588 fraudulent billings by Burke and Attorney DC.  After discovering the scheme, Siemens did not pay an additional 14 fraudulent invoices.  It is unclear from the public record how Burke’s scheme was eventually uncovered.  In addition to the felony charges, the indictment seeks forfeiture of approximately $2.4 million.

Until recently, Burke was employed as “Of Counsel” with the New Jersey law firm of Cha & Reiter, LLC. According to a recent version of the firm’s website: “Mr. Burke is a registered patent attorney with experience in patent and trademark law, and related licensing issues. He is a former senior counsel for Siemens Medical & Imaging Group and a patent counsel for Generic Electric.”  According to Cha & Reiter, Mr. Burke earned a B.S. in Electrical Engineering from Bristol University, England, and received his J.D. from Rutgers University School of Law.  Mr. Burke is no longer listed on the law firm’s website.

The USPTO’s attorney database states Burke became registered as a patent attorney in 1997.  His registration status is still indicated as active.  Since Burke is subject to the disciplinary jurisdiction of the USPTO, the OED Director may–and presumably will–initiate an investigation pursuant to 37 C.F.R. Section 11.22 into whether formal disciplinary charges should be filed.  The USPTO will not hesitate to impose discipline for fraudulent conduct or conduct involving moral turpitude.  As discussed in our post dated August 1, 2014, the OED takes criminal conduct seriously even when that conduct has nothing to do with practice before the USPTO.

For the time being, bar discipline would appear to be the least of Burke’s problems.

 

Leave a Reply

Your email address will not be published. Required fields are marked *